We are often asked to dust off our crystal ball and project what farmland prices will do in the future. Our response is often, “Tell us what the revenue produced from that farmland will be and we can give a better idea.” One way to get an idea of these numbers is provided by the USDA through their annual Outlook Conference. This year’s report, released in February, makes projections through 2021. While admittedly, making projections this far out is about as safe as predicting the weather for next June, the report does provide some interesting reading.
The only thing certain in farming is uncertainty. 2012 will be no different. The world and U.S. economy, politics, and of course, weather, all play ever-changing roles in what we receive for our agriculture production. For 2012, the mix of these variables makes for a challenging scenario as grain marketing plans evolve.
The Food, Conservation, & Energy Act of 2008 (aka, the “Farm”Bill) is set to expire on September 30, 2012. Farm programs have existed since the New Deal of the early ‘30’s. The history of the current program actually dates back to the 1996 program which de-coupled payments from actual planted acres. At that time, direct payments were created which were compliant with WTO rules (World Trade Organization) because they were not considered “marketdistorting” (not tied to actual yields or prices). Loan Deficiency Payments (LDP) were also created at that time. The 2002 farm program created countercyclical (CC) payments.
